Companies in the news ... and how they were assessed
Supply chaos: towards autarky
“It’s astonishing how fortunes can change in the matter of a year,” Russ Mould of investment house AJ Bell told The Guardian. AO World, the online electric goods retailer, was “one of the star performers of the pandemic” until it was assailed by supply chain problems. Last week, the company lost almost a quarter of its value (£200m) in a day after blaming shortages of drivers, parts and materials for lower-than-expected profits. AO’s travails are being repeated across other sectors, said The Sunday Times. NatWest boss Alison Rose has described a “real drop” in confidence as shortages “bite”. Some companies, “unable to fulfil orders” and facing a “cash squeeze”, are scrambling to stay afloat. Boohoo boss John Lyttle says the fashion chain currently has about 150 containers “stuck in transit from Asia”, and prices of shipments “have increased sixfold in recent months”. The supply chaos is part of “a wider crisis of globalisation”, said Simon Nixon in The Times. These latest “shocks” are bound to “intensify drives across the world towards greater self-sufficiency” – or “autarky” – with big implications for investors. “The new world is likely to benefit those companies with shorter supply chains, greater vertical integration, a bias to the domestic economy and stable funding.”
Volvo: revving up
Safety and Volvo cars have long gone together, said Lex in the FT. “But just now there’s a need for speed.” The Swedish car group’s Chinese owner, Geely, is pushing ahead with plans to list Volvo in Stockholm to raise $2.8bn in new money. “Billionaire owner Li Shufu does not want to risk markets or international relations hitting a pothole.” The IPO could value Volvo at $25bn, said Ben Dummett in The Wall Street Journal. That represents “one of the car industry’s most striking turnarounds”. When Ford sold Volvo to Geely for $1.8bn in 2010, few held out much hope for a marque whose “product line-up had failed to excite buyers”. But the Geely-bankrolled recovery has made now-profitable Volvo “a roadmap for electric model roll-outs” – it plans to axe gas-guzzlers completely by 2030 – and the brand is “back in fashion in the US and elsewhere”. The last time Li tried to float Volvo in 2018, “investors baulked at the mooted $30bn valuation”, said Christopher Thompson on Reuters Breakingviews. But Volvo seems well placed “to exploit the mania for battery rides”, and may indeed merit “a more Tesla-like valuation”. Prepare for “electric acceleration”.
Ozy Media: “Lazarus moment”
Before its spectacular implosion last week, Ozy Media “seemingly had everything going for it”, said Austin Carr on Bloomberg. A young brand, producing web videos, podcasts, newsletters and events “for the Gen Z crowd”, it had attracted a roster of VIP backers. Then came a damning New York Times report, charging that Ozy had probably “inflated audience numbers”, and detailing a bizarre incident in which co-founder COO Samir Rao “pretended to be a YouTube executive” during a pitch to raise funds from Goldman Sachs. In the turmoil, presenters, backers and advertisers quit and Ozy Media announced it would shut down. Now, in an apparent volte-face, CEO Carlos Watson has declared a “Lazarus moment”: Ozy is back in business. Still, “serious questions” remain. How could a supposedly “legitimate” company be run quite so haphazardly?